Please note that the following document, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence.
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
XXXXX
XXXXX
XXXXX
XXXXX
Case Number: 103336
Business Number: XXXXX
August 7, 2008
Subject:
GST/HST RULING
Tax status of catering services
Dear XXXXX:
Thank you for your XXXXX, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to your supplies of food and beverages under a catering services contract.
All legislative references are to the Excise Tax Act (ETA) and the regulations thereunder, unless otherwise specified.
Statement of Facts
We understand:
1. You XXXXX operate a catering business under XXXXX.
2. You do not have a GST/HST program account under XXXXX you are not currently registered for GST/HST purposes.
3. The XXXXX School Board XXXXX and the XXXXX School Board XXXXX tendered a public Request for Proposal XXXXX for the provision of catering services at the XXXXX
4. XXXXX the School Boards informed you by letter XXXXX that you had been awarded the catering services contract.
5. XXXXX
6. XXXXX the XXXXX is the outdoor education facility for the XXXXX and is also available for community use bookings. XXXXX
7. XXXXX
8. The XXXXX facilities include dormitories, classrooms, a barn, a kitchen and dining hall XXXXX
9. The XXXXX is not an elementary or secondary school, public college or university.
10. XXXXX you are to act as the contractor for any catering services required at the XXXXX and are responsible for organizing an alternate service provider if you are unavailable for any booking (school board booking, or weekend or off-season rentals).
11. The XXXXX is the only location from which you provide your catering services. You regularly work from Monday to Friday during the regular school year, generally from October to mid-June.
12. Grade XXXXX students from various schools in the XXXXX School District visit the XXXXX for XXXXX residential programs. These programs are not required by the XXXXX Ministry of Education. The XXXXX also provides XXXXX residential programs and day programs that are open to all grade levels and to community groups wishing to visit the XXXXX. For the day trips, you may be asked to prepare the lunch meal or the groups will bring their own food.
13. The teachers collect the fees for programs at the XXXXX from their students. For instance, the XXXXX day Residential Program is $XXXXX per student which includes busing, $XXXXX nights in the dorms, $XXXXX meals and XXXXX snacks, and $XXXXX for the program activities. Teachers and parent chaperones only pay $XXXXX.
14. During the regular school year, the number of meals served depends on grade XXXXX enrollment, the number of chaperones each class brings, any additional bookings the XXXXX is able to accept, and the staffing complement at the XXXXX.
15. The XXXXX develops the schedule for the up-coming school year and provides you with a draft copy and informs you of any changes that may arise. The teachers of each residential group are asked to fax in the number of people in their group XXXXX in advance of their arrival on a XXXXX Form. XXXXX indicating the number of students and adults in the group, the dates of the group's visit and any XXXXX.
16. In general, a group from a different school in the district arrives every XXXXX days and you provide each group with XXXXX. You indicate that, on average, there are about XXXXX students and XXXXX adults per group. You usually feed XXXXX school groups per week.
17. There are no vending machines, no bottled drinks or pre-packaged, individual snacks available at the XXXXX.
18. You quoted the following prices for meals in your proposal: XXXXX
19. Other events and programs are held at the XXXXX during the weekends, evenings, summer season and other breaks during the year. Any combination of meals could be required, depending on the needs of the group. As the caterer for the XXXXX, you are given the first right of refusal to provide meals for other groups requesting catering services. A Catering Service Order Form is also filled out for community use bookings.
20. You prepare an invoice at the end of each group's visit. The invoice will be prepared based on the numbers given on the Catering Services Order Form with adjustments as necessary depending on the actual number of persons served. XXXXX.
Ruling Requested
You would like to know if your supply of food and beverages are exempt of GST.
Ruling Given
Based on the facts set out above, we rule that your supply of food and beverages, including catering services, under your contract with the School Boards is a taxable supply subject to the GST at the rate of 5%
This ruling is subject to the qualifications in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service. We are bound by this ruling provided that none of the above issues are currently under audit, objection, or appeal, that no future changes to the ETA, regulations or our interpretative policy affect its validity, and all relevant facts and transactions have been fully disclosed.
Explanation
Generally, supplies of property and services that are made in Canada are taxable supplies subject to the GST at 5% or the HST at 13% where the supplies are made in a province that is participating in the HST (i.e., Nova Scotia, New Brunswick, Newfoundland and Labrador) unless the supply is a zero-rated supply or an exempt supply. Zero-rated supplies are taxable at the rate of 0% and are listed in Schedule VI. Exempt supplies are listed in Schedule V and are not subject to the GST/HST.
In particular, section 14 of Part III of Schedule V exempts a supply of food and beverages, including catering services, made to a person that is a school authority, university, or public college under a contract to provide food or beverages:
(a) to students under a plan referred to in section 13; or
(b) in an elementary or secondary school cafeteria primarily to students of the school,
except to the extent that the food, beverages and services are provided for a reception, conference or other special occasion or event.
Paragraph (a) above refers to meal plans under section 13 of Part III of Schedule V. That section exempts a supply of a meal to a student enrolled at a university or public college where the meal is provided under a plan that is for a period of not less than one month and under which the student purchases from the supplier for a single consideration only the right to receive at a restaurant or cafeteria at the university or college not less than 10 meals weekly throughout the period.
Under your catering services contract with the School Boards, you are not providing meals to students enrolled at a university or public college nor are your meals provided under a plan which a student purchases for a single fee that grants the right to receive at a restaurant or cafeteria at a university or college 10 or more meals weekly throughout a period of at least one month. Rather, the elementary or secondary school students who purchase a XXXXX program at the XXXXX are acquiring a program that includes, as an element of the program, the provision of meals along with transportation, accommodation (except for day trips) and program activities. The students are not acquiring a meal plan referred to in section 13 of Part III of Schedule V.
Also, the XXXXX is not an elementary or secondary school and, as a result, its dining hall is not considered to be an elementary or secondary school cafeteria even when being used in providing food and beverages to visiting students attending programs at the XXXXX. The XXXXX does not have a student body of its own as the visiting students are enrolled in various schools in the XXXXX School District. Therefore, when you provide food and beverages in the dining hall at the XXXXX to visiting students of other schools along with their teachers and chaperones, you are not providing meals in an elementary or secondary school cafeteria primarily (meaning more than 50%) to students of the school.
Further, it is a special excursion or field-trip when the students attend the residential or day programs at the XXXXX. While the programs may enhance or complement the school's curriculum, they are provided outside the students' regular classrooms and extend past regular school hours. Also, the same group of students do not attend the programs at the XXXXX on a regular basis throughout the school year. The School Boards acquired your services to provide meals to the students when they come to the XXXXX to attend these special field-trip programs. Thus, you are providing catering services for special occasions or events when the various student groups attend the short-term programs held at the XXXXX.
Therefore, section 14 of Part III of Schedule V does not apply to exempt your supply of food and beverages, including catering services, under your contract with the School Boards as you are not providing food and beverages to students under a meal plan or in an elementary or secondary school cafeteria to students of the school and the food and beverages are provided for special occasions or events. There are no other exempting provisions in Schedule V that apply to exempt your catering services.
As noted above, Schedule VI lists taxable supplies that are zero-rated. Section 1 of Part III of Schedule VI zero-rates supplies of food or beverages for human consumption (including sweetening agents, seasonings and other ingredients to be mixed with or used in the preparation of such food or beverages), other than supplies listed in paragraphs (a) to (r) of that section. In particular, paragraph 1(o.5) excludes from zero-rating supplies of food or beverages sold under a contract for, or in conjunction with, catering services.
Thus, your supply of food and beverages sold under, or in conjunction with, the catering services contract with the School Boards is not a zero-rated supply under section 1 of Part III of Schedule VI. There are no other provisions in Schedule VI that will apply to zero-rate this supply.
In conclusion, as there are no provisions in Schedule V or Schedule VI that apply to exempt or zero-rate your supply of food and beverages, including catering services, under the contract with the School Boards, it is a taxable supply subject to GST at the rate of 5% as it is made in a non-participating province.
Registration
In general, under subsection 240(1), every person who makes a taxable supply in Canada in the course of a commercial activity engaged in by the person in Canada is required to be registered for GST/HST purposes. A commercial activity includes the making of taxable supplies (taxable at 13%, 5% and 0%) in the course of a business but does not include the making of exempt supplies.
One exception to the general requirement to register is where the person is a "small supplier". In general, subsection 148(1) provides that a person is a small supplier during any particular calendar quarter and the following month if the total value of the consideration for world-wide taxable supplies (other than supplies of financial services, sales of capital property, and goodwill attributable to the sale of a business) made by the person, or an associate of the person at the beginning of the particular calendar quarter, that became due, or was paid without becoming due, in the previous four calendar quarters does not exceed $30,000 or, where the person is a public service body, $50,000.
However, subsection 148(2) provides that a person ceases to be a small supplier at any time in a calendar quarter if the total value of the consideration that becomes due, or is paid without becoming due, in that quarter for world-wide taxable supplies (other than supplies of financial services, sales of capital property, and goodwill attributable to the sale of a business) made by the person, or an associate of the person at the beginning of the calendar quarter, exceeds $30,000 or, if the person is a public service body, $50,000. The person ceases to be a small supplier immediately before the consideration becomes due or is paid for the particular taxable supply that puts the person over the $30,000 or $50,000 small supplier threshold.
Under paragraph 240(2.1)(b), a person who no longer qualifies as a small supplier and is required to be registered, must apply to the Minister for registration before the thirtieth day after the day the person first makes a taxable supply in Canada, otherwise than as a small supplier, in the course of a commercial activity engaged in by the person in Canada.
XXXXX. For assistance in determining your effective date of registration, please refer to GST/HST Memoranda Series 2.1 and 2.2 entitled respectively, Required Registration and Small Suppliers, on our website at www.cra-arc.gc.ca/menu/GTMS_2-e.html. In particular, GST/HST Memoranda Series 2.2 provides an example for calculating the effective date of registration for a person who ceases to be a small supplier.
Also available on the web site, is form RC1A Business Number (BN) - GST/HST Account Information. You can use this form to register for a GST/HST program account under your business number and either mail or fax it to us. You can also register online or by phone at 1-800-959-5525. More information is available in the booklet RC2, The Business Number and Your Canada Revenue Agency Accounts on our web site at http://www.cra-arc.gc.ca/E/pub/tg/rc2/README.html.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-952-9592. Should you have additional questions on the interpretation and application of GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.
Yours truly,
Nadine Kennedy
Charities, Non-profit Organizations and Educational Services Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
UNCLASSIFIED
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